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Which of the following statements are true? I. If there is a wage increase, a worker feels better off and may reduce the number of hours worked. This is known as the income effect. II. If there is a wage increase, the opportunity cost of leisure increases, and as a result, a worker may increase the number of hours worked. This is known as the substitution effect.

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Which of the following statements are true? I. If there is a wage increase, a worker feels better off and may reduce the number of hours worked. This is known as the income effect. II. If there is a wage increase, the opportunity cost of leisure increases, and as a result, a worker may increase the number of hours worked. This is known as the substitution effect.





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